TWSE working closely with FSC to boost turnover

The Taiwan Stock Exchange (TWSE) has worked closely with the Financial Supervisory Commission (FSC), Taiwan's top financial regulator, to boost turnover on the country's stock market.

The TWSE, which operates the main exchange, said the FSC announced additional measures in November, including increasing the number of stocks eligible for day trading, to encourage investors to play the market and help the market climb out of its turnover doldrums, the exchange said.

In line with the FSC's goal to allow more stocks to be day-traded, the TWSE said it has expanded eligibility to all stocks allowed to be short sold, adding an additional 10 stocks open to day trading from the previous 1,428.

Day trading allows traders to first buy and then sell the same shares or vice versa on a single day.

The Financial Supervisory Commission (FSC) has expanded the range of day trading at an accelerated pace since June 2014, hoping to boost interest in investing in the Taiwan exchange and lift market turnover.

The TWSE said that from the time the FSC started easing rules on day trading phase by phase to the end of October 2016, day trading has accounted for 9.26 percent of total turnover, contributing to investor willingness to put money into the market.

But its impact on overall turnover has been limited, as the market continued to face sluggish trading in 2016.

According to the TWSE, the aggregate turnover on Taiwan's stock market totaled about NT$18.9 trillion in 2016, the lowest level in 15 years. It was also the third consecutive year in which the annual turnover has declined, TWSE data showed.

Average daily turnover in 2016 was about NT$75.5 billion, down more than 18 percent from a year earlier, the statistics showed.

The TWSE said it has also pushed for a small investment mechanism for retail investors, who have long complained that they cannot afford such expensive stocks as smartphone camera lens supplier Largan Precision Co. (???), which closed at NT$3,790.00 (US$118) on Friday.

Shares in Taiwan are usually sold in minimum blocks of 1,000 shares, meaning investors would have to spend NT$3.79 million to buy Largan stock.

The TWSE said the small investment mechanism would allow retail investors to invest a fixed amount in stocks and Exchange Traded Funds in successive periods.

The exchange said it has also doled out prize money to branches of securities firms that record an increase in turnover brokered on a quarterly basis to try to boost trading volume.